Financial Markets

Which of the following statements is not true with regard to money market?

• It involves low market risk.

• It is situated at specific locations.

• Deals in unsecured and short-term debt instruments.

• The instruments traded are highly liquid.

Which of the following statements is not true with regard to Treasury bills?

• Are issued in the form of a promissory note.

• They are highly liquid and have assured yield

• They carry high risk of default.

• They are available for a minimum amount of ₹25,000 and in multiples thereof.

Which of the following statements is not true with regard to Commercial paper?

• Is a long-term unsecured promissory note with a fixed maturity period.

• It usually has a maturity period of 15 days to one year.

• It is sold at a discount and redeemed at par.

• Companies use this instrument for bridge financing.

Raj Enterprises wishes to invest ₹1,10,000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund?

• 6

• 7

• 4

• 2

Which of the following statements is true with regard to financial markets?

• They link the households which save funds and business firms which invest these funds.

• They work as an intermediary between the savers and the investors by mobilising funds between them.

• They allocate funds available for investment into their most productive investment opportunity.

• All of the above

The allocated function is performed by

• Financial market

• Capital market

• Money market

• All of the above

It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year.

• Primary market

• Secondary market

• Capital market

• Money market

It is an instrument of short-term borrowing by the Government of India maturing in less than one year.

• Commercial bill

• Treasury bill

• Call money

• None of the above

It is used as an alternative to bank borrowing for large and creditworthy companies,

• Commercial bill

• Commercial papers

• Call money

• None of the above

. It is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.

• Commercial bill

• Commercial papers

• Call money

• None of the above